How to avoid overspending when trying to get on the housing ladder

Alex Neill, Director of Campaigns, Which?

A friend of mine was recently flicking through a publication which lists the properties for sale in her home town, and she saw a photo of her first flat.

After admiring how it now looks – all pale flooring and white walls – she clocked the price.

Now, admittedly it had been 20 years since she’d bought it, but the one-bedroomed flat which she’d sold for £45,000 was now on the market for £150,000.

That’s an eye-watering price hike of 230 per cent – a rise of 11.5 per cent every year.

At the time she bought the flat she earned £16,000 a year.

Nowadays the average annual salary is £27,000, which means so many first-time buyers would have no chance of purchasing that starter flat.

It just goes to show how hard it is for young people trying to get on the property ladder.

So it’s little wonder that new research by Which? mortgage advisors, which questioned 2000 people as part of its annual home buyers survey, found that one in five buyers (22 per cent) are exceeding their budget when buying a new home.

The UK’s highly competitive housing market also means that almost half (45 per cent) of property buyers are pushed to the upper limit of what they planned to spend.

The research further showed that it’s the under-30s who are particularly vulnerable to overspending, with a third (34 per cent) of 25-29 year-olds paying more than they had planned.

Being stretched that far can have serious consequences on other financial commitments and leave people incredibly stressed and potentially in financial trouble, which is why it’s so important to be honest about what you can afford.

And why the right information is vital, because when you’re at your limit the last thing you need is an unexpected fee or cost that you hadn’t planned for.

Seeking independent mortgage advice early on is an important part of ensuring that you really can afford the commitment of buying a house.